BP, partners plan to invest $1 billion in Alaska oil fields

By Claudia Assis

BP PLC
/quotes/zigman/247026/quotes/nls/bpBP said Monday it plans to invest $1 billion and add two drilling rigs to its Alaska North Slope fields over the next five years, saying it was spurred by tax breaks approved last month.

The companies would increase drilling and well works, upgrade existing facilities, and add up to 200 new jobs in the state, BP said.

Production in the area has been in decline for some time, and Alaska lowered taxes for oil and gas companies, keeping taxes on profits a flat 35% and eliminating a system that increased taxes as oil prices went up.

BP added it has support from other stakeholders to look into an additional $3 billion in new developments in the west of the Prudhoe Bay.

Production at Prudhoe Bay peaked in the late 1980s and it has been declining ever since, with worries the Trans-Alaska Pipeline could be shut down if levels continue to drop.

Prudhoe is the U.S.’s largest oil field, but energy companies have focused on newer opportunities in places like North Dakota and Texas, where hydraulic fracturing, or fracking, has helped unlock oil and gas in shale formations. Alaska is the U.S. fourth largest producing oil state, ahead of Oklahoma and behind California.

Critics of the tax break have called the Alaskan bill a “giveaway” that will keep the state in deficit, and that projects being touted were already in the works.

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